This article is from the Australian Property Journal archive
A FALL in asset revaluations across Rubicon America Trust's portfolio has triggered two financial covenants.
RAT has revalued 32 properties at $US1.23 billion, a fall of 7% or $US97.5 million when compared to $US1.32 billion in April 2007.
As a result of the fall, the subordinated debt security issues where the issuers are RFA II and US REIT, the undertakings to maintain financial covenants would be breached.
RAT said this would give rise to an event of default if the trustee or at least 25% of the bondholders in the issue were to serve its issuer with a default notice and the default was not cured within the applicable grace period.
“While an event of default exists, each issuer has agreed that neither it nor RAT will pay dividends, make distributions or make any payment on other debt which ranks pari passu with the issued debt, and if this covenant is breached the bondholders might try to take legal action to prevent such payments from being made.
“RAT is currently in discussions with the bondholders of the two issues and with Credit Suisse, the warehouse debt provider to RFA, in relation to a restructuring of the financial covenants and the financial parameters of the respective debt facilities/securities,” RAT said.
RAT’s share price traded 3 cents lower at 10.5 cents at market close.
Australian Property Journal